Sigh

Well, enough about bating poor realtors. Letâ€™s whisk now to the Wet Coast of this great country where some truly devastating personal tragedies are being quietly played out, one tormented household at a time.

I know itâ€™s hard to witness naked suffering, yet there may be lessons for us all. Letâ€™s hope so. Some good must emerge from such loss.

Dear Garth,

I am confused and hereâ€™s my hard-luck story: At the beginning of this year, after watching prices fall during the latter half of 2008, I made a decision to sell our house and wait out the market, thinking prices would fall even lower. I had never really liked our home (in Vancouverâ€”I moved in with my husband five years ago) and wanted to start over with a home of our own. Well, of course, no one predicted that just after I sold my house, mortgage rates would drop significantly leading house prices to shoot up. So, now Iâ€™m sad because I know if I had waited another four months, I could likely have banked an extra $50,000â€”of after tax dollars! But hindsight is everything, so I try not to lament this loss.

On the plus side, as a renter, I now have an extra $800,000 with which to, a) invest at about 1.5%; or b) troll the real estate listings ready to pounce on the off-chance that prices continue on their upward trajectory. It is also challenging to talk about this with anyone I know. Iâ€™ve given up saying I think prices might not hold their value. Every person I mention this to looks at me like Iâ€™m totally, ridiculously stupid and the longer prices increase, the more I am prone to believe it myself.

But every few days I hear about a friend, colleague or friend-of-friend being laid off or I read something new and interesting about China, or I contemplate the real estate situation in the US, and I canâ€™t believe that prices are going to continue upward. It does not make sense! No matter how many lemmings (sheeple) there are. But maybe our government will intercede at every step of the way to ensure that house prices donâ€™t lose their valueâ€”or that no one defaults on a mortgage. If Obama can give upwards of $8,000 to families who canâ€™t pay their mortgages, Iâ€™m sure we can also generously provide Canadian taxpayersâ€™ dollars to those who buy what they canâ€™t afford.

So today I find myself eyeing a lovely renovated, post-and-beam home for a mere $900,000 and thinking that maybe it is good value. Garth, help me back on trackâ€¦thereâ€™s no one I can turn toâ€¦

Yours most sincerely,

On the edge in Vancouver

Hey, I told you this was ugly.Â A special Vancouver kinda tragedy â€“ profound remorse at not being able to screw another fifty grand out of a greater fool for a house which in any other city would have trouble finding a buyer for half the price.

Anyway, OTEIV has asked, and so shall we answer. A few points to chew on:

First, anyone who tries to time the stock market is called not a bear or a bull, but a pig. Same with real estate. And you qualify, babe. Just thank your few remaining lucky stars you bailed out of Van homeownership that close to the peak of the market. Thousands to come would trade places in a heartbeat.

Second, get new friends. Anyone who thinks real estate prices in Vancouver will rise in next couple of years as rates increase and the economy stumbles should not be allowed to handle money.

Third, what the hell is wrong with having no property, no debt, and $800,000 in cash? As for investing it at 1.5%, send it to me and Iâ€™ll give you 2% (and then reinvest it in bank preferred shares for 7%).

Fourth, we all know the reasons real estate prices cannot and will not continue to rise without end: Chronic unemployment, collapse of tourism, forestry and manufacturing, an energy shock, higher interest rates, climate change and water licking at the gold floor of Hotel Van, disintegrating Boomers, government debt binge and a simple inability of average families to afford average houses. And what are the reasons houses will appreciate anyway? Oink, oink.

Finally, get out of town before you spend 900 large on anything.Â Especially a property you donâ€™t need. Youâ€™re confusing investing (to satisfy your greed) with social status (house lust). Itâ€™s like driving the Sea-to-Sky with twelve shooters in ya, girl.

It wonâ€™t end well. Bacon bits.

143 comments ↓

“So today I find myself eyeing a lovely renovated, post-and-beam home for a mere $900,000 and thinking that maybe it is good value.”

Send us a MLS link…. 900K you must be stoned on crack to think that this price is a “bargain” listen to yourself sweets, you are sniveling like a child who should be happy as hell you have 800K in the bank. I mean come on here who are you kidding? sit on the side lines and rent for a couple years, or at least till after the Golden O show is over and watch the prices fall like loose fitting jeans on a Granville Street hooker. You think your friends give a crap if you own or rent?? if they snub you for not owning you need to sell that LEASED BMW and get a life.

Actually I think the sea to sky is probably one of the safer roads to drive drunk these days. Thanks to the coming olympics, our saviour from fiscal responsibility, the whole stretch is a 50km/h construction zone. A perfect late night drive home from the bars.

If we look at what happened in the US, with preferredâ€™s getting converted to common and then diluted all to heck, I am not sure 7 % is worth the risk, at least not with all the money.

Get a brokerage account and put maybe 5 â€“ 10% in CEF (gold, still the best way to hold it), get 4 different CDIC insured accounts at 4 different banks with $100,000 in each, and maybe put the rest in bank preferred shares, if you feel lucky. The time for investment is going to be after the other shoe drops, and it will. Probably soon. Insiders are selling hard.

For all the green shoots around here nothing over $500,000 is moving. And why would it? Who can afford these prices? Even if interest rates were zero paying back $500,000 with after tax money is not a realistic proposition for most people.

she did kinda have a point about the government being likely to try to keep prices artificially high (just like they tried to do in the uk 3 years ago, with the government buying a percentage of your house from you to help you pay for it)

Hmm, we’re seeing the same phenom here on Van Isle. Seems like the low rates have re-inflated the bubble for a last gasp. My suspicion is that Harper has decided that devaluing the Canadian dollar will sustain an illusion of real estate valuations long enough to push him through the next election cycle. What happens after that? I guess all these pigeons come home to roost don’t they. On a mildly related note, I was talking to a tradesman today who has been working the “Bare Mountain” site in Victoria and apparently the investors have pulled the plug on the latest condo projects and none of the sub-trades have been paid for months. A lot of quite financial bleeding is going down while the MSM plays pied piper to the unwary.

I wouldn’t get too worried about missing out on the current bounce in Vancouver RE. Even after this bounce if you compare the price of Vancouver RE vs some of the bubbliest RE in the US 1 year after their peak on the Case Shiller Index (july 06) Vancouver prices (July 08) have dropped further (around 7% – most in the US were only 1-3%) Remember in early 2007 everyone in the US was going around saying subprime was contained – looks like it was contained to planet earth only.

As an aside I also looked at the RE Board of Greater Vancouver and took a look at various price levels of detached houses in Greater Vancouver. If you plot the Vancouver prices vs the US Case Shiller Index and ‘Leap forward’ the Case Shiller Index by 2 years you get a very, very similar chart of housing prices. If we are following the US 2 year delay in Vancouver then we will bounce around for the rest of the summer (+/- 1 or 2% per month). But once the fall comes prices will start to weaken and then the price decreases will quicken into 2010. Not saying it will happen for sure but based on that 2 year lag that’s what it looks like would happen.

We rented a house for 4 years from a slum landlord who grudged fixing anything. The place is a dump. I don’t know how I tolerated living there. Finally decided to look for somewhere else this summer. So, while looking, we were told ours was being sold. Landlord made a Cap Gain of $300k during the 4 years we lived there, PLUS the rent of approx $80k. Good for him!

I feel sorry for the hapless idiots who bought it, as it requires bulldozing , or $200k in upgrades, being a 1940 house in bad condition, with original baths, kit, single-paIN (no typo there) windows, etc. It sold for close to a million smackeroos. There’s a jackass born every day. this is NOT a water front or view lot, BTW!

So, just to cement your point that while property values plunge, rents will also DEcrease, we are moving to a penthouse condo with magnificent ocean views. The rent there is a $1500 per month. WHY BUY WHEN YOU CAN RENT CHEAPER?

Garth’s advice is good — bank preferreds, with dividends going straight into TFSA’s (two people = five grand each); agricultural commodities; some base commodities; silver coins; two or three Cdn. equity mutual funds.

Keep yourselves diversified.
——
#96 TJ at 7:01 pm — “. . . Now it takes two incomes to try and stem the tide. The tsunami is just off Kits Beach, pal.”

On CHBC-TV news last night, the normal supply of food at the food bank is three months; now it is barely half that. The lady who oversees operations there said that May had the biggest drop in donations — 29% compared to last year.

A two-income family meant that financial donations were always flowing in. Not any more — they are way down, as more become unemployed and / or leave the Okanagan altogether. A double-income family is fast becoming a rarity.

You are correct — we are surfing the tsunami of the disorderly economic meltdown. The elite, including the Con-bots will be pleased.

“. . . US unemployment rate is soaring; over the past half year by about 0.5% per month. . .” (Well beyond that — roughly 25 mln. Americans no longer have jobs.)
——
Now the truth starts to come out about this false pandemic claptrap! — http://tinyurl.com/nokwr8

“As the anticipated July release date for Baxter’s A/H1N1 flu pandemic vaccine approaches, an Austrian investigative journalist is warning the world that the greatest crime in the history of humanity is underway. . . .”
——
Another way big biz, big brother and big elite will control us. — http://tinyurl.com/lo86et
——
A little Timmy’s trivia for y’all, courtesy John Thompson’s column on castanet.net . . .

“I guess Tim Hortons gets credit for it because who else feeds us donuts everyday of the week, twenty-four hours a day? Canadians consume more donuts per capita than any other country in the world. All this began with one store owned by the ex-Toronto Maple Leafs in 1964. In Canada at retail seven out of every ten cups of coffee that are sold are sold at Tim Hortons. Who counts all this stuff anyway?… “

I hear LA real estate is good for investment. Surely you can by Neverland with those 800 smackers?! Anyone sitting on 800k crying about real estate in Vancouver after riding the wave up needs to get a life – and stop looking for a petting from Garth.

It’s just housing, you don’t have to own it you can rent it, and unless it’s price is anywhere near it’s fundamental value (the present value of the future stream of rents it would generate), you’re being stupid with your money.

Hey, here’s an idea, take that 800 large and actually buy something that makes something or actually employs somebody or even makes somebody else’s life just a little bit better. Start a little business of some kind. Child care is in desperately short supply – hire some ECE’s find some space and start doing something that matters…and at $1100 per month for a kid in Vancouver, you might even be able to make a bit of a profit at the same time. Or maybe (again only if the math makes sense) buy some land in some not so insanely priced area (maybe rural Saskatchewan) and rent it to somebody who wishes to farm it.

Just quit expecting to make huge sums of money for not actually doing anything of value…

OTEIV you said …”hereâ€™s my hard-luck story” …only hard luck part is if you started with $1.6M + other malaise …to me you sound just spoiled …please get some perspective and fresh north van air …go hang out with some poor people for a bit …they are easy to find …they will be the 6 billion others less fortunate then you …jeesh, grow up and do something hard….save yourself.

On the + side you still have cash and the means to grow up and be meaningful.

Philosophically speaking …why do we try to save the ones we shouldn’t when there are more worthy we could save but don’t?

Please do not make this post even worse and tell me she is a 30 something “entitlement” girl.

Groan – another letter with the amazingly similar writing style of Garth’s. Another set up for his usual put down – ‘You greedy idiot – anyone with a brain would be living in a trailer out back their bike shop’.

Come on sheeple, are you for real! Can you not think of the pile of pain and debt we are facing!!!

Just do the simple math, I know it might hurt some of you but honestly!

This honestly sums up a Canuck, watching the world go by without a care in the world, having an oink along the way for good measure, missing the point completely and eating every word of the manipulators with a side of toast!

The used too support our intelligence as a nation of people but Garth’s Blog has really opened my eyes to the absolute ignorance of Canadian Sheeple.

Getting new friends, sorry Garth, we are very hard to find and will not tolerate these ones for one moment.

Move East people ….. or better still try the planet Mars and buy Water Stock. I have always said the West Coast is beautiful but the problem is it is full of selfish West Coasters …. thanks Garth for once again confirming my suspicions. I read Senator Duffy was out there looking around could he be looking for a post and beam also now with his new pot of gold?

â€œSo, now Iâ€™m sad because I know if I had waited another four months, I could likely have banked an extra $50,000â€”of after tax dollars! But hindsight is everything, so I try not to lament this loss.â€

A loss would have been had you sold below your actual equity in the house. Market equity is only realized once the house is sold, and you did realize â€œan extra $800,000.00â€.

Your conflict about whether to invest 1.5% (I presume secure investment?) v. trolling for real estate suggests you are losing sight of why you sold in the first place: â€œI made a decision to sell our house and wait out the market, thinking prices would fall even lower.â€

You state that you watched â€œprices fall during the latter half of 2008â€, and then a mortgage rate drop â€œleading house prices to shoot upâ€.

This conflict continues between discussion with others that lead you to doubt â€œprices might not hold their value.â€ Yet, you are receptive to information about unemployment issues, events in other countries which relate to real estate, and conclude:
â€œI canâ€™t believe that prices are going to continue upward. It does not make sense!â€

Your first instinct about a situation will usually be the truest. Bad decisions can be made from second guessing what you already know.

â€œIf Obama can give upwards of $8,000 to families who canâ€™t pay their mortgages, Iâ€™m sure we can also generously provide Canadian taxpayersâ€™ dollars to those who buy what they canâ€™t afford.â€

I take it you donâ€™t believe others should buy â€œwhat they canâ€™t afford?â€ Sensible. However, why then, would you be â€œeyeing a lovely renovated, post-and-beam home for a mere $900,000 and thinking that maybe it is good value.â€

You have $800,000.00. This would mean carrying a mortgage of $100,000.00 plus closing costs. You donâ€™t state if you are working, close to retirement or retired, nor I am clear on whether you have any other outstanding debt. So, would you be buying what you canâ€™t afford? Further, would you be buying a home with property taxes that you might find difficult to pay in the future?

I donâ€™t get a sense of you wanting a house as a home – more as an investment. If that is the case, then perhaps renting and keeping your cash liquid might work better for you.

Haste makes waste. It may not be obvious but we are in a depression. This will become more than obvious in the next eighteen months. RE may look reasonably good for the next year and the stock market a little longer but then look out below. One ought to pay heed to Garth’s advice….it is sound but his timing is a bit off. It would appear that the USA and others are digging themselves out of a recession when, in fact, they are just digging the hole deeper.

Do you know what you are drinking and what it actually is doing to you and your familyâ€™s bodies/health?
You need to know so can take action to protect yourself and other human beings!http://www.fluoridealert.org/

From what I’ve see of the good science based evidence
We would be seeing less illnesses and suffering if water fluoridation had not started! It’s time to stop water fluoridation and reduce your other sources of fluoride exposure! Why do you think your tooth past tube says ‘DO NOT SWALLOW’? There is a long list of reasons to keep your fluoride exposure as low as possible. Stop adding it to the drinking water supply is a good way to start!

I agree with everyone on this site that home ownership is not for some people…

I am paying a lot to live in my place (Centertown Ottawa) but I dont drive or have expensive vices so I manage.

The only negative thing about renting is there is no long term stability (the owner can sell or not renew your lease) so if you have a nice place at reasonable rent, beware!

The other alternative is to move into a cooperative. I have friends who have lived in coop and are very happy. They pay rent which is average for the area and they have stability.Some of these cooperatives are all apartments but I have seen some which are townhouses and they are all very well cared for…They are hard to get into, especially if you want one of the subsidized units, but once you are in, you are in for as long as you want to stay and some of my friends have lived in their units for 30 years.

Because the coops have to have a number of units for people with disabilities, it provides an accessible housing option with long-term stability for this segment of the population that does not have alot of housing options.

Would any of you consider renting in a coop as an option to buying, all things being relatively equal?????

BTW…. Garth… your next entry should pay homage to Michael Jackson (maybe a picture taken from the front seat of the roller coaster at the highest point, looking way down and the title “THRILLER”.)

Hey, your not alone. There is a ridiculous amount of people, who are convinced that housing is overpriced (because it is), and that the stock market is generally overpriced (bear market rally), which means that there is an even bigger amount of $$$ sitting on the sidelines.

I am not sure if it is greed, waiting for a better price, or fear of losing their hard earned money.

We rented a house for 4 years from a slum landlord who grudged fixing anything. The place is a dump. I donâ€™t know how I tolerated living there. Finally decided to look for somewhere else this summer. So, while looking, we were told ours was being sold. Landlord made a Cap Gain of $300k during the 4 years we lived there, PLUS the rent of approx $80k. Good for him!

Garth Lover… maybe a little letter to the CRA after your move out… would be a nice treat for your SLUM DOG LANDLORD!

I bet you….99.9% of the time… these types of LANDLORDS ARE NOT reporting this rental income to the TAXMAN!!!!

That is not what most people would define as a hard luck story. Try self pity, stupidity and greed, the whole letter drips with it. Even worse this woman believes that government intervention can somehow save the real estate industry from its own excesses. Sad.

Well said – just because the rain didn’t fall when the witchdoctor promised doesn’t mean it won’t fall ever again. The signs are all there that the economy is aldready on the path of a generational nasty correction. The only thing Witchdoctor Garth didn’t factor in to his original timing prediction was the MASSIVE amount of coordinated government intervention to stave off the effects of the correction (not only coordinated with other governments, but also coordinated with other players who control wealth and it’s movement in this world).

However, the little Dutch boy’s finger in the dike will only hold so long…and as many have stated here, this government and corporatist intervention will only make the eventual correction that much worse.

I don’t believe she bought the house, but rather moved into her new husband’s house upon marriage about five years ago. She didn’t buy it or make a decision to buy it , therefore she made no investment decision, therefore I give her no credit for “earning” anything.

Interesting that she refers to everything as “I”, “my” and ” as a renter, I have $ 800,00….” , don’t you think, dd?

Go back and read this letter again, slowly, and you may divine a subtext.

What happened to we, us, what my husband wants, etc.?

With the disclaimer that we don’t have the ‘back story’ on this woman’s history and situation, my guess is she is divoriced and the house was sold to settle that or she is a widow and sold the house after her husband’s passing. Either way, from the tone of her regretting missing out on an additional 50K, I suspect investment accumen had little to do with the circumstances of the sale.

In any event, on the facts as presented in her letter (which I encourage dd to give more than a passing glance to before commenting to someone who did), one can conclude in the very minimum that she is a whiner with a little luck.

Garth,
I can’t believe you didn’t make this up. Someone who has been incredibly lucky and bought at the right time and has gotten rich, not due to business savvy or hard work and she is whining about making another 5%? I’m getting tired of hearing about these boobs who just happened to buy in at the best time in over 50 years. Anyone dumb enough to buy at these prices deserves to loose, easy come, easy go…

The last thing I would ever do is fabricate a letter. Besides, how could I make this stuff up? — Garth

Anyone still not accepting that real estate in Canada – especially the west – is overvalued should check out the links below. No, I am not advocating moving to Europe, but when real estate prices in under-populated Canada exceed those in France or Germany there is something wrong. If scarcity determines value then prices of houses in Europe should be a multiple factor of prices in Canada. And this is just not the case.
Pricing in following examples are in Euros, so multiply by 1.6

“BTWâ€¦. Garthâ€¦ your next entry should pay homage to Michael Jackson (maybe a picture taken from the front seat of the roller coaster at the highest point, looking way down and the title â€œTHRILLERâ€.)”

I was waiting for this, do we have to go here on this blog?? come on this guy has been dead for years and this time he finally decided to lay down….

On the edge in Vancouver: I’ll bet not many of your home owning friends have $800k in the bank or much of anything for that matter. I guess misery really does love company eh?

Nobody is holding you prisoner now and cash has given you an opportunity for true freedom if you can resist the direction of the herd.

I’m in the same boat as you and people are stunned when I tell them that I’m living for free because of my investments. In fact even if my investments returned nothing and I ate into 5% of my principle per year I’d still be doing pretty well. It feels great to have some “attitude money” and to do what I want when I want.

Yes I’ve made some sacrifices to live this way, but I still feel good about it. Nobody around me seems to understand that.

I left a rather negative comment on Greg’s Blog, LOL. I had to edit it about 6 times to make it semi-polite.

I doubt he will publish it anyway, but we’ll see. Everyone, go there, and pile on. Don’t hold back.

It’s a funny thing, real estate. The market moves slowly, so when you predict prices may fall, and they don’t plunge by the end of that month, the clueless assume “it will never happen here”.

I firmly believe the Canadian real estate market is just tracking the US with a 2 year delay, as several have posted above. Vancouver just represents the tail end of the train, far behind the lead. If so, the true ugliness is next Summer and the year after and the year after that…all across Canada, maybe excepting the East Coast who never had the “boom’ – a good thing for them.

The cold fact is that real estate, like all markets, rises and falls in easily defined cycles. The usual length of an up-cycle is 5-8 years – so if prices have been rising steadily since 1997, this “up” is way over due for the “down”. The usual length of a down-cycle is 4 1/2 years, and since we are still bursting the biggest credit bubble in history after a 12 year run-up, the “down” will be more like 6 years, or more, with reversion to the mean and the usual overshoot to the downside.

I don’t know why these simple facts are so non-obvious to most people. They just don’t want to know what they don’t want to know. But they find out the hard way when the “down” part of the cycle clubs them upside the head with the big clue stick. Common sense in so un-common.

If you think “it can’t happen here”, I will point again to some personal friends who were underwater for 12 years on their Mississauga townhouse – 1991 to 2003. Eventually, they sold it at a small profit, after making enormous mortgage payments for 12 long years. If you total up their monthly payments over that time, they would have been far, far better off to rent, but they were young, naive and stubborn.

I personally think Garth is way too optimistic. But I guess when you are a media personality you have to temper your views a bit or you will never get any media coverage. I don’t blame Garth for that, having contrary views like he does makes you an easy target for a dismissal by MSM types who have an economic interest in perpetuating the present unstable house of cards.

I spend up to 16 hours a day reading economics and trading websites (Fall, Winter, Spring) and have for the last 9 years. Right now I am in Summer holiday mode, but I will be back at it full time come September. From all that reading, of many sources all over the globe, I conclude that this crisis is about 20% over at best, and the worst is still ahead. “Recovery” will be after 2015 at the earliest, more likely 2018-2020 plus. Canada has not even felt the worst effects yet.

Time will tell who was right and who was wrong. In the mean time, there is no “bullish” case to be made right now for the global economy IMHO. No “green shoots” or “second derivative” that even signal the real bottom has been reached. The last few months have been just an brief intermission before the next show.

But I don’t let my macro views affect my day-to-day trading, I just try to trade the tape that I am given. Trying to trade on macro fundamentals will most often see you broke before the market goes your way. Which is why I am a day-trader, and very rarely keep a position open over night, never mind longer periods, in most markets. That’s just me, some others can and will see it differently. To each his own. In the bigger picture, market daily, weekly or even monthly price action is just noise, despite what the MSM may tell you. The Kondratieff Wave suggests 10 more years of Depression before the real “recovery”, which seems about right to me.

We can review everyone’s predictions in the future, and see who was right and who was wrong. Enjoy your Summer anyway, the weather is great. Economic cycles come and go, life still goes on, don’t obsess over the economy – its’ out of your hands.

Hey bye ……. like I said hey, those West Coasters sure are fart smellers ….. make 800 grand complain about loosing 50 grand (speculation at best) and think about buying at 900 grand ….. the place you posted is about 1/2 drive or less to Confederation bridge which is free one way and a short drive to Moncton NB that has direct flights to almost everywhere. These people could like the good life there or a place like it. But no way they want to make more and more and more …. feeding lawyers, banks, RE people and yes the taxman and in the end all of the above will screw them …. But heck go for it all that tax money feeds my pensions and health care costs, matter of fact please talk all of your garden party friends into doing the same, buy buy buy and drive the market through the roof. My little ode home just might get up to 250K!

Yes, it’s sadly true that now I can’t seem to convince my in-laws that BC (Canadian) RE is doomed as his sister sold her house in a small logging town in 1 week, multiple offers and got list. Well, I still believe RE in Canada is in trouble, just because 1 really super fool is out there doesn’t change the world economy. Oh and she bought right away at 100% list a property that was on the market for 4 years, needed 10 years of renos and in the same dead end town. Smart eh?

Now with her house sold she is complaining about the date. Not the possession date but the date of her daughters first baby. It seems her daughters baby birth conflicts with her move out date…She says maybe god will delay the birth…

FLASH!!! Flaherty wants to increase the financial literacy of Canadians!

Is he trying to bring the economy to a final shuddering halt? Doesn’t he know that a financially literate, smart consumer would not buy a house, car or stock under the prevailing circumstances of having to reject all claims made for any good or service, then being careful about the rest of a transaction?

A “Truth in Advertising” law would be cheaper and more effective. But then government would have to do more than distribute eyewash.

If there’s any doubt that’s what we’ve been seeing, note the neo 1930’s socialist sentiment in this blog. You’re being called a pig, it’s ‘money you didn’t earn’, a ‘house is just a place to live, Dude’, not an investment, etc.

As if we’ve never seen people make fortunes in real estate. Or that doing so somehow damages the innocent. Note also the hint of devine retribution for your ‘greed’, the ‘greedy’ shall be punished, etc. Bear markets do bring an upswing in socialism and religious sentiment.

#19 Jan
Groan â€“ another letter with the amazingly similar writing style of Garthâ€™s. Another set up for his usual put down â€“ â€˜You greedy idiot â€“ anyone with a brain would be living in a trailer out back their bike shopâ€™.

I donâ€™t manufacture this stuff. I just attract it. â€” Garth

Jan, I don’t understand why you think that the letters that Garth posts are so obviously made up by him.
You stated the same thing on the BC (Before Crash) thread. I personally know “Single mom looking for the right direction” and the letter Garth posted was completely authentic. Why couldn’t this persons letter be true. Any idiot could make a lot of money in the real estate market in Vancouver with a bit of dumb luck. 800k is on the high side but that’s what makes the post interesting. I’m sure that Garth receives lots of mail that is more average and a hell of a lot less interesting that he doesn’t bore us with.

You are spot on with your analysis. As a Vancouverite, this is a classic case of entitlement from someone who married and/or divorced right. “Starter” wives and husbands, where the marriage lasts 5-7 years until one figures out what they really want, is the key to financial freedom for many in this city.

I would like to believe that this individual worked hard for her gains, and if so, good for her. I will not begrudge her new found financial freedom.

However, knowing the work ethic and the very limited number of well paying positions in Vancouver, this windfall is likely the result of picking the right individual to marry. Apart from a small but very lucrative junior mining sector (now decimated), and a relatively small professional class, there is no real money here.

The fact that she is renting though does say something because the pressure to “own” here is overwhelming. You cannot grab a coffee without the barista talking about her new condo, or take a cab without the cabbie telling you this is the best time to invest. RE is a religion here that permeates every social encounter.
After all, its seems that its not about the quality of life or life experiences that shapes a person in Vancouver, but rather it is the title of â€œownerâ€ or â€œrenter.â€

Sounds like a classic case of housing psychosis. This woman uses the word “I” no fewer than 23 times in four short paragraphs, rambling on about the weal and woe associated with dumping an over priced home and having $800K on hand. Luckily there is another over priced home out there for a mere $900K to help her with her final act of financial self immolation.
Using the Royal “we” when it comes to bailing out housing speculators is fine though.

#34 Greg W., Oakville on 06.26.09 at 8:20 am
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Stop spreading gibberish (we have experts looking into this and it can be assured they are doing their best to protect and improve the health of Canadians. What’s the average lifespan of a Canadian? Has it been increasing over the years?). Here are the facts on water fluoridation (from Health Canada):

“the Canadian Medical Association and the World Health Organization endorse the fluoridation of drinking water to prevent tooth decay. Community water fluoridation has been identified by U.S. Centers for Disease Control as one of 10 great public health achievements of the 20th century.”

“Canadian and international studies agree that water that was fluoridated at optimum levels does not cause adverse health effects.”

FLASH!!! Flaherty wants to increase the financial literacy of Canadians!

#58 Herb

ROFLMAO! Yeah, that has all the validity of a homeless person giving advice on RE. Dim Jim should try ‘educating’ himself. He should start with the letters ‘D’ (depression, deficit, deceit, dumbass!) and ‘R’ as in recession, reprobate, retarded, risky, ridiculous.

And no, there is not a drug available to cure depression of the economic kind. Although it looks like Michael Jackson tried them all at the same time.

Makes me wonder if all the money lovers here will end up the same as he did? He had it all but was never satisfied so he turned out his own light. There is a lesson in it all.

“I had never really liked our home (in Vancouverâ€”I moved in with my husband five years ago) and wanted to start over with a home of our own. Well, of course, no one predicted that just after I sold my house, mortgage rates would drop significantly leading house prices to shoot up. So, now Iâ€™m sad because I know if I had waited another four months, I could likely have banked an extra $50,000â€”of after tax dollars! But hindsight is everything, so I try not to lament this loss.”

I take it they have split up, or this guy lets her walk all over him. She could have banked an extra 50K, not we could have banked an extra 50K. I made the mistake of marrying, and now get to try to correct my mistake, and cut my losses. Maybe our marriage failed as I did not let my wife walk all over me, even though she tried. Perhaps I am a little bitter still. Marriage is nothing but an expensive piece of paper imo.

Just because Gordon Gecko (Wall Street ) said greed is a good thing does not necessarily make it so .
You missed out on 50k ? Too bad so sad .
As a human being you suck .
Tell your tale of woe walking . No one here is impressed .

Having 800 G in the bank (with 500 G gains profit in last 5 years) and the ego being bruised because she no longer owns a house really says something, doesn’t it?

This stigma of “only ‘losers’ rent” is a good example of the degree of programming and conditioning people are subjected to. Some seem more affected by it than others. I guess it comes down to how strong one’s will is and his or her ability to discern truth from falsehood, although they are usually mixed to confuse and confound people in this world of deception.

After dark, turn on the teevee then turn off the lights and look at the living room walls. They’ll flash like a strobe light is working in the corner of the room. That is what many people subject themselves to for hours each day.

In the high octane housing market of recent decades, owning a house is analagous to sitting at a blackjack table. Few will take their profits and leave the table. There’s nothing wrong with taking your winnings, stepping back, and watching for a while.

Then there are those foolish enough take ever more increasing lines of credit the casino is only too happy to give them in order for them to remain playing at the table…but the casino ultimately wins in this scenario.

In the consumption based economy we live in, accumulation of material assets by going into debt is promoted as being good for ourselves and for the country. Wasn’t this behaviour looked down on several decades ago?

1) you are married, say for a longish time
2) you are not too bright about women
3) you have been with one woman a long time, didn’t have many girfriends, maybe unlucky with women
4) you have not made a substantial decision on your own in years
5) you always answer yes dear, are non-confrontational and generally whipped when dealing with your female partner (if you have one)
6) you have deep seated self -esteem issues
7) you always wanted to be a girl
8) you rush to the defense any women whenever you construe that anybody is in the least way offensive of them, regardless of the truth of the matter
9) you really “love” women

So when a guy passes an opinion on a woman and her POSSIBLE lifestyle, you go off on him. You know, given that you felt it so important to comment leads me to believe that he probably got a little too close to the reality of your life in his description of her relationship dynamics.

Take your own advice you goof; – “Do yourself a favour and get some counselling”

“Any idiot could make a lot of money in the real estate market in Vancouver with a bit of dumb luck. 800k is on the high side but thatâ€™s what makes the post interesting.”

Just wanted to point out that she may have $800K after selling, but we have no idea how much the place was bought for originally, down payment etc, so it’s not like she actually made a free and clear $800K profit. That’s what she (they) walked away with, a chunk of which probably includes the original down payment, and whatever was invested into the place in mortgage payments before selling ..

Well Herb Harper an Flaherty are now on top in the poll race, housing is bubbling, stock markets are up and the Canadian Shield held as spoken …… so Herb jump on the Con Wagon and take a ride on Conexpress to wealth in Canada ….. these two are greatest political duel ever and could save the world if only more people would follow their lead. Don’t you feel good?

#54 Got A Watch on 06.26.09 at 11:20 am
I left a rather negative comment on Gregâ€™s Blog, LOL. I had to edit it about 6 times to make it semi-polite.

I doubt he will publish it anyway, but weâ€™ll see. Everyone, go there, and pile on. Donâ€™t hold back.
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Are you not the same piece of work that was ranting about personal attacks not so long ago?

When someone criticizes real estate pundit, Garth Turner, their blog often gets inundated with not-so-friendly comments from Garthâ€™s followers. Case in point are these comments left on Greg Williamsonâ€™s blog recently.

This is not meant to be a commentary on Turner or Williamsonâ€™s viewpoints. Each have their own valid beliefs. The point is this. Thereâ€™s no place for hate-filled commentary in a rational debate. If adults canâ€™t get across their points with civility, they donâ€™t deserve the airtime.

Props to Greg for standing up and publicly defending himself. He did not delete one post (that we could see), despite commentators hurling expletives and making numerous tasteless references. Greg is far more tolerant than we would have been.”

“THIS IS WHAT I PREDICTED WAS GOING TO HAPPEN! Bernanke is acting just like a CEO who is suspected of embezzling from his own company and decides to burn the building down before the auditors can look at the books!

“The Federal Reserve is NOT your friend. It does NOT provide a service. It is and always has been a scam to transfer wealth from the people to the owners of the Fed and Bernanke’s threat to crash the whole system is a giant neon sign on the building flashing “GUILTY AS HELL!”
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The opposite of hyper-inflation is hyper-deflation. — http://tinyurl.com/mukz7l
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The link is somewhat interesting, but the paras. below are easier to read. Note the one name in the second para. — http://tinyurl.com/nubnye

“By the end of the Dreyfus Affair, there was a new political movement â€“ complete with a â€˜Founding Fatherâ€™ â€“ as well as a new, very widely-used term…..The new â€˜Founding Fatherâ€™ was Theodor Herzl â€“ and the movement Zionism. The new term? â€˜Anti-Semitismâ€™…

“Itâ€™s also noteworthy that the initial ingress of separatist Jewish settlers into Palestine dates from the 1880s, long before Herzlâ€™s involvement; it was funded by Baron Edmund James de Rothschild.

“Seen in this historical context, The Dreyfus Affair was what in modern times we call a â€˜media beat-upâ€™.”
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Big Pharma strikes again. — http://tinyurl.com/rx8qqv

“As suspected, and now confirmed, Michael Jackson dead at age 50 due to Serotonin Syndrome as a result of 2 serotonergic medications – Zoloft (antidepressant) and Demerol (pain killer).

“Lisa Marie Presley has not only lost her father, but now also her ex-husband, to the same basic combination of drugs: antidepressants and pain killers.

“Michael Jackson lost his life due to the organ-stopping effect of Serotonin Syndrome thanks to a drug that should have been removed from the market decades ago – Demerol. A serotonergic medication similar in action to antidepressants, atypical antipsychotics, and other pain killers.”

Without citing specific posts, it is interesting to watch the pack mentality evolve regarding the circumstances of the person who wrote the letter.

Much of what I read smacks of a small â€œmâ€ mind. Hurtful people come in all shapes, sizes and genders and marital status, as do good and decent people.

Someone did mention (Peter I believe) that her use of â€œIâ€ indicated divorcee or widow. I noted that as well when I initially read her letter.

Perhaps some of you could take time out your divorcee bash fest and consider the fact that possibly this women is a widow. Further, we do not know her age and she may be of a generation when the husband took care of finances. Despite their short time together, they may have practiced their generations mores with respect to financial matters.

I agree that her letter could appear self-indulgent in some respects, but we canâ€™t hear her tone of voice or inflection on certain phrases. Try reading it again from the perspective that she might be an older widow.

So, what if….

When she wrote: â€œI had never really liked our home (in Vancouverâ€”I moved in with my husband five years ago) and wanted to start over with a home of our own.â€

Perhaps they were both widowed and married later in life. Maybe she wanted a fresh start with a home for the two of them without the memories of his deceased spouse? Itâ€™s possible.

This next part is interesting also: â€œWell, of course, no one predicted that just after I sold my house, mortgage rates would drop significantly leading house prices to shoot up. So, now Iâ€™m sad because I know if I had waited another four months, I could likely have banked an extra $50,000â€”of after tax dollars! But hindsight is everything, so I try not to lament this loss.â€

When I read this again using the older, widowed perspective, it occurred to me that it might not have been the â€œextraâ€ $50,000.00 she was lamenting, but rather, the â€œlossâ€ of such a large sum of money. If she was raised to value a dollar, then to her it was a loss and she felt bad about it, especially if she was selling the home of her late husband.

She doesnâ€™t state that she is angry about loosing the money. Instead, her not lamenting this loss might mean that she is shouldering responsibility for her decision.

Also, at two points in the above paragraph she uses the word â€œsadâ€ and â€œlossâ€. Maybe she is really referring to her grief over loosing her husband.

â€œSo today I find myself eyeing a lovely renovated, post-and-beam home for a mere $900,000 and thinking that maybe it is good value.â€
Her use of â€œmere $900,000â€ might be an expression of sarcasm or even disbelief that the home she likes is so expensive.

The post-and-beam home might represent a connection back to a normal life for her. While everyone experiences the stages of grief outlined by Elisabeth Kubler-Ross, the manifestations of the individualâ€™s grief can vary widely. This person might want the home simply because it â€œfeels like homeâ€ at a time when her life has been ripped apart and turned upside down. Perhaps she wants a home where she can paint or garden and continue hobbies she used to enjoy.

The â€œgood valueâ€ comment about this home could reflect back upon her sense of responsibility when spending money.

Itâ€™s quite a judgment she received considering none of us had all the facts regarding her background.

I hope like Hell that this lady isnâ€™t a widow who truly needed some support and a bit of helpful feedback.

I have some friends here in Vancouver who would likely tell a very similar story if put in the same situation. When house prices average 1.5 for something v. bog-standard in Kits and area,$800-$900K seems like a drop in the pond. You’re not even in the game until you can break the $1M mark in this city. Crazy as this all seems, it’s how people think in the “best place on earth”.

Gimme 800 K and I will turn it into 650 K when I ‘invest’ in that crappy 500 square foot closet in Yaletown.

In the last 14 weeks, insiders have been huge net sellers of American Equities.

From Harry Schultz: “Some U.S. embassies worldwide are being advised to purchase massive amounts of local currencies; enough to last them a year. Some embassies are being sent enormous amounts of U.S. cash to purchase currencies from those governments, quietly. But not pound sterling. Inside the State Dept., there is a sense of sadness and foreboding that ‘something’ is about to happen … within 180 days, but could be 120-150 days.”

The next wave of Home Foreclosures and just catching height. These are Alt-A loans, and even some American “Jumbo” loans. (*those over Fannie and Freddie limit). The major Banks in the US and Europe are hoping that the cash from panicked Governments keep coming, to cover some $15 Trillion worth of CDS and SIVS, or they’re going to default.

Net Japanese Exports are down 35% in the last month.

American GDP shrank 5.5% in just 30 days.

Vancouver’s credit has already been crimped by Olympic insanity and if you are a Bc Government worker, hoping for that golden pension.

Hold on: The BC Government Pension has 98,000 people on it’s roles now. The Fund is invested 25% in Fixed investments (gee, I hope they aren’t corporate bonds on US CD’s with those phone AAA ratings) and (drum roll) 75% in Real Estate.

California is so broke they are asking for the civil servants to take furloughs.

47 other States are in financial trouble, with non-sale of their bonds, and crashing Tax revenue, eviscerating the budgets. Rainy day fund? What’s that?

Boy, there are sure going to be a lot of people spending those big bucks during the Olympics. That is if the 70% of Americans that don’t have passports get organized, and the European Union’s soaring unemployment rate, doesn’t cut into Holiday plans.

Gee, England is doing so well that the IMF vampires are closing in, and it’s still daylight. Gordon Brown is so stupid he sold 300 tons of UK gold for $325 an ounce.

Canada lives and breathes with exports to, gulp, the USA.

Yoink.

Real Estate? Not Now, and not for a long time.

Just wait til those rates come up and watch the stampede.

800K, wisely watched (*I would be in bear funds, trade long on food commodities and short Commercial Real Estate and start growing veggies in your rented back yard.

Yes, I still have cash flow positive real estate…but the next few months will see us move into an historic era…the second Gilded Age is dead….and we have already started, the correction. The mainstream media should be calling it, what it really is : a DEPRESSION.

Lamenting over missing out on 50k of “potential” proceeds after bagging 800K is more than petty.

Often the wealthier people become the stinger they are. A bit of a pet-peeve for me which is probably why on guava.ca, where you can see initial house listing price and reduced prices, I often get a good laugh at seeing people reducing million dollar plus homes by 1%.

You have at least acknowledged the optimism and generosity (for lack of other words) of younger generations. Unfortunately in this market, they are increasingly joining the ranks of the greater fools.

Sorry to comment on the MJ thing… But did anyone else notice how they kept commenting on how he died at his “RENTED HOME”. Like this is really important… Again shows you the stigma against those who rent. Interesting.

… but rather moved into her new husbandâ€™s house upon marriage about five years ago. She didnâ€™t buy it or make a decision to buy it , therefore she made no investment decision… one can conclude in the very minimum that she is a whiner with a little luck….

I take it you’re being facetious when you say this is your hard luck story but it’s possible that joking about hard luck is not funny to the bottom 99% of the world below you. Roughly speaking..

Some 1.1 billion people in developing countries have inadequate access to water, and 2.6 billion lack basic sanitation.

Nearly a billion people entered the 21st century unable to read a book or sign their names.

Millions of women spend several hours a day collecting water.

For the 1.9 billion children from the developing world, there are 640 million without adequate shelter (1 in 3)

Rural areas account for three in every four people living on less than $1 US a day and a similar share of the world population suffer from malnutrition.

Assets of $2,200 per adult place a household in the top half of the world wealth distribution in the year 2000. To be among the richest 10% of adults in the world required $61,000 in assets, and more than $500,000 was needed to belong to the richest 1%.

Consider yourself lucky, you are in the top 1 percent of the world. Spend it wisely, and if you need to adorn yourself in a beautiful home, ask yourself what is it you are trying to make up for.

if I had my druthers, I would sign on on a nuclear submarine and surface in about three years, when the penny will have dropped with the Canadian electorate, and a real government will be trying to sort out the CPC mess.

With regards to Greg William’s video, I have a couple of issues (I’m basing it on one of his commentators, John’s math):

1. This seemingly simple statement for his (corrected) math post:

Please Note: This is corrected math from what was presented in the video. I said in the video that it was approximately $600 and that was incorrect.

(The corrected math shows that the difference in monthly payment from a doubled interest rate would be $926/mo.)

My issue: $926 is 54% more than the original stated number of $600 in the video – we can’t overlook such a drastic error and shows Greg did not do his homework before making the video.

2. The increased income that would be required to qualify for the mortgage at renewal time is 41% more than what would be required at the beginning, as shown here (please do correct me if I’m wrong):

Assumptions:
a) 35% “debt service” ratio (i.e. 35% percent of income is allowed to be used to pay debt)
b) the mortgage is the only monthly payment (not realistic but let’s just assume this for the best case scenario)

My issue: the new income that would be required is 41% more than the initial income required (approx. 8% increase, PER YEAR). Although this is entirely possible in a good economy for some people, for most, this is a dream, especially in a poor economy.

No.88.Samantha. Thank you for writing a humane response to this woman’s situation.
She must be shocked by now after reading some of these vitriolic messages, I know I am, what a lesson she’s just learned about naively wandering into a website with an innocent question.
Good luck to her, I hope she invests her pile wisely, and that she ignores the more hurtful responses.

Bang on Garth. The real estate machine BS has people with intelligence losing all their common sense in order to get the listing. I just had some dear friends tell me of their assessment by their agent that was at least 25-30 % over what the neighborhood is selling for.

It is disgusting how these whores can then get away with this garbage. When I am asked why I am not buying since the market is so hot and I answer “because it’s way overpriced and unaffordable” I get a look of shock like I am diseased for saying such a thing.

The final result is that people get so much paper equity that they lose touch with reality of what it costs for average people to purchase and their minds are clouded by lying scum sucking leaches.

Did you see Pam Anderson’s new adventure ? That deserves a thread of it’s own.

Things happen in threes. FF and MJ crossed over to the inner planes \ other worlds Thursday; he was the third, albeit unreported — http://tinyurl.com/qaw5dw

And while the majority of sheeple worldwide are bamboozled by FF’s and MJ’s passing, something else is happening. — http://tinyurl.com/mqs56f
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Is this a true hoax or is someone telling fibs? From The Onion. — http://tinyurl.com/kj3bx5
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This link is in opposition #90 TJ at 8:34 pm — “. . . what it really is : a DEPRESSION.” — http://tinyurl.com/qggu7n — BTW, I wholeheartedly disagree with Buffett, and agree with you.
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This continent may be on the verge of a real “Independence Day”, an invasion of somebodies from somewhere. See the amount of vaccines they’ve ordered up!

There will be plenty left for Canada as well; bunkers and squirrels aren’t going to do us any good at all! — http://tinyurl.com/nle2py
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No doubt AIPAC is the driving force behind Obama’s rhetoric. Anyone can google 1953 and see how the Shah of Iran was put in power; the democratically-elected Muslim govt. was tossed by the CIA / Mossad.

Following that, SAVAK — the secret police ((thugs) of the Shah, same as Hitler’s SS were put in place to keep law and order. So history repeats. Two links.

Justification and justice ….. strange how so many people are all for this but it appears most want their share of pie first before their is fairness and accountability for all.

I do not know if others have noticed but I feel the stress in the lives of people serving the public more than ever ….. the banks are a prime example coupled with shopping stores …. this leads me to believe the true numbers of belt tightening (saving for a rainy day) is well underway and what is being spent is out of necessity more than anything. We can all quote and list number for homes and past historical data … but I believe RE is now just a money game and for most as the home is no long a home and community but an investment no different than the TSX. This is sad for society as a whole. How lucky we were when we grew up knowint the home was shelter and place to sleep eat and play knowing all near by Mr. or Mrs. and their children’s first names. Another point I am going on a short trip and due to having to switch aircraft I am now at amendment #4 due to cancelled flights coupled with bookings and departure times. It must be stressful at best for those in this industry alone . I can only imagine what it will be like when the real crunch hits once all this stimulus money drys up ….

Hey ladies and gentlemen …. it is nightmare getting around town as all this infrastructure taking place (Detour after Detour) and waisting gas waiting for someone to turn the Stop to Slow hand held sign. Oh well more gas tax money!

“Give me 800K and I will double it”
What a load of BS
0% interest rates
Stock markets are so dangerous because
governments are the biggest traders right now
and are way over bought
RE is going nowhere
Capital preservation is priority

“..what the hell is wrong with having no property, no debt, and $800,000 in cash? As for investing it at 1.5%, send it to me and Iâ€™ll give you 2% (and then reinvest it in bank preferred shares for 7%).”

Is there no risk to owning stock? When interest rates spike how have the markets performed historically? Furthermore, to label someone who is able (or attempting) to effectively time a market as “greedy” is disingenuous. If an investor can successfully time ANY market for up/down swings then more power to them! Isn’t that one of the reasons people read this blog?

GT, I really respect what you have to say and admire you for sharing your insights publicly. Just be careful not to become as dismissive and misleading as those who’s sole purpose is to propagate real estate/stock bubbles. I really hate to say it (because I like you), but it sounds hypocritical.

Caesar, Rome is burning, our citizens are up in arms, garbage is collecting everywhere, we must return our troops from the far west, that is a wasted effort…Caesar, why do you spend so much time in your bunker?

So I commented at Greg’s Blog, and he published it, saying he disagreed. But later, in the replies to other comments, he lets slip “â€œbut sadly our current mini boom is being driven by young first time home buyers who are maxing out.â€ and further down “â€œBenjamin Tal has recently said often that this past nasty recession is erasing 15 years of gluttonous behavior in 2 years.â€.

It seems deep down, he really agrees with Garth.

Maybe it would be too damaging to his business to admit it. Could be bad for business to tell those now buyers “You know you will be underwater on the value of that home soon, and then the Bank will raise your interest rate…and you’ll be back to living in your parent’s basement. Sorry about that.”

Nah, truth is poison in the real estate “industry”. Here, have another cup of this tasty kool-aid, sir, and sign here and here and initial here.

Actually I have had residential rental property, sold it because
a) I did not want to spend time passing out the cheese to go along with the whine.
b)Bought in low sold high (and yes paid the taxman)
c) for the same capital investment, my industrial /commercial properties produce a higher rate of return, the tenant pays for all improvements, and there is t-net. (the tenant pays for the insurance, taxes and maintainence)

Only one property I own does not produce income, my personal residence. I would sell and downsize but even a simple carpenter is smart enough to realize that “it’s cheaper to keep her!”

No matter how much fiat currency our government prints will not quell the economic tides which naturally occur in the free market. Inflation will be a byproduct of mass fiat note stimulus as more money chases relatively fewer goods, but ultimately wages will increase proportionately and while goods and services will cost more consumers will have more money with which to consume them. So too will they pay more in taxes with each additional dollar multiplied through the economy.

Inflation is driven by demographics not monetary policy.

Inflation means little to those in the workforce who can and will ultimately seek higher wages to maintain parity. Those who leave the workplace, on the other hand, feel the ravages of inflation as they see those dollars they saved at relatively lower rates of pay eroded to worthlessness. The monetary policies and consequential low interest rates of today further are further exasperating the falling worth of ones savings.

We are facing a retiring population increase like never before and this demographic shift is going to have consequences like never before.

Housing prices are the least of our worries be they rising or falling. The elephant in the room has not yet been recognized. That elephant is the demographic shift of the workforce toward retirement. Fewer workers = fewer taxes. Inflation will abate falling government revenues but very quickly divulge the appetite of that elephant.

#92 Repatriated Expat: “Often the wealthier people become the stinger they are.”

Repatriated Expat,

Samantha had an interesting post too, the other day, along those lines in her note to RJ, the BC writer:http://www.greaterfool.ca/2009/06/17/why-i-did-it/#comment-32681
In it she said, “you realized a â€œsignificant appreciationâ€ read â€œdollarsâ€ from boom town real estate values. In other words: easy money. People have a tendency to burn through easy money quickly â€“ be it real estate, lottery, or inheritance. Once you acquired this new wealth (real estate windfall) it became easy to think of yourself as â€œnot an average familyâ€ and richer than the norm. The combination of the two can make for some interesting decisions.”

Samantha’s quote could be applied to “On the edge in Vancouver” too. Although there may be people who can handle suddenly becoming “nouveau riche” I think that OTEIV us trying to tell us something in the above letter, and although her sense of humour is there, I don’t think most people picked up on it.

It’s been something of interest to me for a long time, why are some people so generous and well-rounded, yet others, who know better, begin to get this way and teeter on bad decisions when they are faced with new found fortune. That what I think OTEIV is saying. How can she stick to plan. What are the “knowns” about the future that will help her through the storm of bad information and lust. I think she’s just looking for the tools to ward off bad advice, shut out the little voice that really would like the post and beam, and find some security over the future of her $800K so that she and her money don’t soon part. We all know the saying, easy come, easy go. And if you didn’t spend your entire adult life accumulating and preparing for having that $800K you may not have had the years to build up the life defenses against a wall of nay-sayers and the patience to stick to the new plan.

OTEIV, all I can say is, stick to plan. Ignore peers and the urge to conform. Be a smart rebel, but be a good rebel.

……….Youâ€™re not even in the game until you can break the $1M mark in this city. Crazy as this all seems, itâ€™s how people think in the â€œbest place on earthâ€.
_______________________________________

If you want to quickly terminate a real estate conversation at a Vancouver party, mention the word “fundamentals”. You’ll be surprised at how fast the topic turns to Luongo’s contract, the 2010 Olympics, or weather.

# 110….Bottoms Up…
Sorry should have said, in my opinion “brilliant”, mainly because it offers another side to the shots being taken by many here, it is unfortunate the small minded can only fire shots rather than offer contructive assistance or even attempt some understanding. Samantha, in my opinion, must have a great deal of empathy and appears to possess an open mind. Qualities that far exceed the put down mentality of many posts appearing here, in my opinion. Your comment could easily apply to all who have posted here aside from myself.

#48 You need counseling. No one wants to hear about your hot asian wife(previous posts) in one sentence and then your spew about evil western women in another. Get over it dude. She left you for a reason (the western woman) and my guess is that the hot asian chick will be right behind her.

â€œChronic unemployment, collapse of tourism, forestry and manufacturing, an energy shock, higher interest rates, climate change and water licking at the gold floor of Hotel Van, disintegrating Boomers, government debt binge and a simple inability of average families to afford average houses. And what are the reasons houses will appreciate anywayâ€¦â€

Well letâ€™s try to bring some balanceâ€¦

Chronic unemploymentâ€¦itâ€™s true unemployment is high, but nowhere near the levels seen during the depressionâ€¦and the government â€œstimulusâ€ didnâ€™t kick in yetâ€¦also many prices came down a lot (gasoline, diesel, natural gas, metals, electricityâ€¦)â€¦the 90% still employed have more money in their pockets.

Collapse in manufacturingâ€¦we may see an end to that soonâ€¦inventories are depleted, warehouses emptyâ€¦just check out the collapse in days_of_sale numbers for carsâ€¦

Energy shockâ€¦youâ€™ve got to be kiddingâ€¦weâ€™re awashed in natural gas: they will have to shut down production as weâ€™ll soon run out of storageâ€¦and due to shale gas and LNG prices will stay very low for the foreseeable futureâ€¦; oil: after we run out of storage at Cushing and Rotterdam, almost filled the SPR, they had to store it on shipsâ€¦70million barrels of oil and 50mb of products â€¦add to it about 8mbd spare capacity, mostly OPECâ€¦and the Saudisâ€™ just brought another 1mbd field online; ethanol galoreâ€¦there is so much of it, prices are so low, that even with government subsidies there is a producer going bankrupt every weekâ€¦the ethanol facilities are bought for cents on the dollarâ€¦;
nuclearâ€¦no need for them, there is natural gas at $4 enough for 100 yearsâ€¦and the uranium market needed that like a hole in the head, soon the treaty to be signed by Putin and Obama regarding reduction of nuclear arsenal will bring huge quantities of uranium from the disaffected weapons on the marketâ€¦

Higher interest ratesâ€¦we shall see about thatâ€¦ do you have a timeline?

Climate changeâ€¦I wonâ€™t even go thereâ€¦climate changed since day oneâ€¦about 5 billion years agoâ€¦and it will keep changingâ€¦

Disintegrating boomersâ€¦not sure what do you mean by thatâ€¦BTW, you know of course, the generation following boomers is much bigger?…and with much higher divorce rates, single moms and all thatâ€¦they are going to need housingâ€¦

hi Garth and others, I’ve just re-read Garth’s “2015 After the Boom” which I bought in 1996. The book’s predictions have missed the last housing boom, but have been quite accurate in many ways. (The book predicts a housing gloom practically forever). Now seeing the dollar printing orgies I expect inflation and don’t want to be caught with cash or bonds on hand (some stocks are fine to me). So I’m looking into purchasing houses in Florida (Tampa Bay) for rental – they carry themselves with 20-25% down, and could provide income in several years when I plan to retire there.

What’s the wisdom of the experts here – are southern houses a good cash flow source going forward, will they be of interest to retiring boomers (they are to me), and if no, why? thanks

“Well letâ€™s try to bring some balanceâ€¦Unemployment .. nowhere near the levels seen during the depressionâ€¦Collapse in manufacturingâ€¦we may see an end to that soonâ€¦Energy shockâ€¦youâ€™ve got to be kiddingâ€¦

Well let see … the depression. Well they say US is already at about 18% unemployed and still going up. This is the real rate. Unemployed people don’t send a lot of money so there goes your theory on inventories.

Energy shock. Yes. We are at $70 oil and we are in the worst economic Climax since the 198o’s! $70 bucks! A couple of years ago $70 will the high water mark.

Natural gas is cheap however change over to this type of fuel for the majority of energy users wil take years not months.

Perhaps Mr Williamson is confused a bit. While some posters here may come off smug or rude that should in no way mean they are dumb and incorrect in their assertions. His slickness should also not be confused with correctness or accuracy. In any event Real Estate is cyclical and is tied to rates and employment as evidenced in the US … people bought homes on credit because rates were low and lost those homes when rates went up and/or list their jobs…It surely is folly to think this cannot happen in Canada… Though it most surely will. The RE & mortgage industry has profited from low rates surfacing just before higher unemployment.. Surely this is not sustainable and prices will bend towards the median as history has proven. An endlesd uptick should be a warning to all but those with preapproved mrtgs and big dreams keep on dreaming and eventually succumb to the inevitable, big bills and house rich.. Cash poor… Surely Williamson realizes that the first few years of a mrtg are interest and like rent that is gone too… if values slide so does equity..
My opinion is that it will be painfully obvious when to buy and when to sell… You just need the will to act.

Mr. Turner,
I was kind of hoping I’ll get more then “Have a nice denial” as a reply…

While it is true unemployment numbers aren’t pretty, I have plenty of anecdotal evidence about the 90% still employed being left with plenty more money in their pockets…for example, my heating bill this winter was half what I used to pay…
Went to Costco last Saturday…took awhile to find a parking spot…getting out was even more time consuming…

As a general observation, the doom&gloomers need to get their story straight…deflationary depression or hyperinflation…just pick one…canâ€™t have it both ways.

If itâ€™s going to be deflation, then keeping the money in the mattress is the best option.
If inflationâ€™s the conclusion, then buy, buy, buyâ€¦stocks, real-estate, durable goodsâ€¦go get a loan and buy some moreâ€¦

If the dollar weren’t folding so quickly, there would be relative parity among the world’s economies — http://tinyurl.com/kj4p6c
——
Nothing to do with financials, it’s the US Hate Bill which may end up travelling north, as the feds. and others want to control our access to the ‘net. — http://tinyurl.com/ovy9wl

“Here is the essential text:

“Whoever transmits in interstate or foreign commerce [radio, TV, internet] any communication, with the intent to coerce, intimidate, harass, or cause substantial emotional distress to a person, using electronic means to support severe, repeated, and hostile behavior, shall be fined under this title or imprisoned not more than two years, or both. (HR 1966, SEC 3, Sec. 881a)”
——
Now, back to reality. — http://tinyurl.com/dhvwpr

“. . . World industrial production, trade, and stock markets are diving faster now than during 1929-30. Fortunately, the policy response to date is much better. The update shows that trade and stock markets have shown some improvement without reversing the overall conclusion — today’s crisis is at least as bad as the Great Depression.”
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Depopulation. 4:26 clip of how it is being implemented now. Big pharma may have something to do with this, as the boomers are retiring soon. — http://www.youtube.com/watch?v=ho-0SHFEgGo

Well of course if you spend the 800,000 on a house, you will have it three years from now. Who knows what it will be worth, but you will have the house. If you had invested in the market as Garth advises, you would have lost a good chunk of it in the first week. And Garth wants us to mortgage our houses to invest in the market! Does anyone know how ridiculous this advice is? And the reason is, if you borrow to invest in the market you MUST sell when the market goes down – you have no choice! Shame on you Garth for giving people silly advice!

You well represent the reason most folks are financially screwed – ignorance. People leverage real estate by 95% every day of the week, a degree of indebtedness which is not even legal when buying equities. This can magnify losses and destroy wealth faster than a stock market decline – just look south for evidence. As for secured loans used to purchase financial assets, they are not callable. Good luck. You need it. — Garth

Will we ever have a P.C Leader in Ontario who isn’t heel bent on giving the election to the Liberals? Tory, with faith based schools and now Hudak, who is going to abolish the Human Right Commission…that ought to fly well in Ontario? Please lets find someone who can defeat tax and spend McGuinty? Obvious the PCs aren’t interested in the job…and is there another alternative…yes there is! Independent MPs!!!!

#121 Solitario you said:
“and with much higher divorce rates, single moms and all thatâ€¦they are going to need housing”

Cannot disagree with you on more needed housing but what single Mom can afford the median house price in our big cities …and if they live in the small burgs …whadda think their median income will be …bottom line …RE is too expensive for single moms…end of story.

Garth isn’t this blog becoming tired. I mean how many times can we beat up real estate as an investment. If ya like real estate…..well than ya like it. If ya like the stock market than ya like it………and so on.

It all goes up and down like a yo-yo.

And you aren’t in real estate(investment) if the home you live in is your only real estate. You bought a home because you thought it was good value and a nice place to live. Who cares what it is worth today or 2 years from now………this isn’t Vegas baby.

Dear Rory,
maybe many single moms in need of housing cannot afford to buy, but they could surely afford to rent, or the government is going to help them pay the rent…
Somebody who could afford is going to buy and rent to the single moms…That’s how it works…

And Dear RuralRick,
deflation is easier to control than inflation…as long as you own the world’s reserve currency…just print money…this could be a long discussion, but for now take my word on this one…to make controlling deflation a even easier job you need: 1) turn “printing money aka quantitative easing into a global phenomenon…check; 2) have captive creditors (they already own too much of your debtâ€¦)â€¦almost check;â€¦Now you only have to worry about the price of goldâ€¦

Investors buy properties to make money. If the upside on RE is zero (and a probability of going down) and you cannot make 3 to 6% (or more) on your invested money then investors will not buy ….on a median home (in most large cities where most live) you cannot charge rent equal to what is costs to carry the PIT …bottom line – RE is too expensive for the median income…repeat after me – RE is too expensive…IMO.

What are your thoughts on interest rates and when they may start edging up again. I see the BOC has “committed” to stay the course until mid next year, but some advisors have suggested locking in mortgages sooner rather than later. We have a couple houses in Halifax (our own and a rental) on variable at below 2%….locking in would double that rate. Thoughts?

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The views expressed are those of the author, Garth Turner, a Raymond James Financial Advisor, and not necessarily those of Raymond James Ltd. It is provided as a general source of information only and should not be considered to be personal investment advice or a solicitation to buy or sell securities. Investors considering any investment should consult with their Investment Advisor to ensure that it is suitable for the investor's circumstances and risk tolerance before making any investment decision. The information contained in this blog was obtained from sources believed to be reliable, however, we cannot represent that it is accurate or complete. Raymond James Ltd. is a member of the Canadian Investor Protection Fund.